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HomeMy WebLinkAbout14-542 McGraw ADVICE OF COUNSEL August 28, 2014 Diane McGraw Executive Director Office of Travel, Tourism and Film DCED Innovation and Investment th 400 North Street, 4 Floor Harrisburg, PA 17102 14-542 Dear Ms. McGraw: This responds to your letter dated July 11, 2014, and your submission received July 30, 2014, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., would impose restrictions upon employment of the Executive Director of the Office of Travel, Tourism and Film within the Pennsylvania Department of Community and Economic Development (“DCED”) following termination of Commonwealth employment. Facts: You request an advisory from the Pennsylvania State Ethics Commission regarding the post-employment restrictions of the Ethics Act. You have submitted facts, the material portion of which may be fairly summarized as follows. You are currently employed as the Executive Director of the Office of Travel, Tourism and Film within DCED. You have submitted a copy of your official Commonwealth position description, which document is incorporated herein by reference. Before you commenced Commonwealth employment, you submitted a proposal to serve in the capacity of a consultant to help launch the Pennsylvania Tourism Partnership (“PTP”), a public/private partnership formed for the purpose of raising funds and directing the marketing strategy for the Pennsylvania tourism industry. Although you were one of two finalists for the consultant position, you were instead hired by DCED on June 3, 2013, for the position of Director of Tourism. You state that at the time of your hiring, it was indicated to you that once PTP was up and running, you would have the opportunity to assume the position of Executive Director of PTP should you decide to pursue such position. You were promoted to your current position as the Executive Director of the Office of Travel, Tourism and Film on September 6, 2013. McGraw, 14-542 August 28, 2014 Page 2 It is administratively noted that per the PTP’s website, PTP is a collaborative effort among public sector entities, including DCED and the Office of Travel, Tourism and Film, and private sector entities, including a non-profit corporation named “Team Pennsylvania Foundation” (“Team PA”). See, http://patourismpartnership.org/about/. The PTP Steering Committee is comprised of business and industry leaders and representatives from key government agencies and industry-related organizations from across the Commonwealth. Id. PTP will exist initially within Team PA for up to three years during the start-up phase, operating under Team PA’s 501(c)(3) charter and funded with seed money from DCED for operating expenses. See, http://patourismpartnership.org/invest/. PTP was launched in May 2014. You state that over the past year, DCED contributed $152,000 to Team PA to pay the PTP Project Director and cover miscellaneous operating expenses. You further state that DCED is now providing a “D2 grant” of $750,000 to cover additional non-operating expenses and tourism grants. The PTP Steering Committee is charged with overseeing the development of a strategic plan, branding, marketing campaign, and development plan. The Secretary of DCED has a seat on the PTP Steering Committee, with a DCED Deputy Secretary as the designated alternate. You state that PTP is about to embark on a search to engage an additional consultant(s) or agency to help carry out goals related to development, branding, and marketing and that contract(s) will be awarded in September 2014. You state that although DCED provided funding to Team PA for such contract(s), the funding did not come from grants awarded by the Tourism Office but rather from a “D2 grant” administered and awarded by another branch of DCED. You are considering seeking employment as the Executive Director of PTP. Funding for the Executive Director position would come from private sector dollars raised by the PTP Steering Committee, the PTP Project Director, and a development person. You are also considering returning to your private consulting business, which has been inactive since you commenced Commonwealth employment. Based upon the above submitted facts, you pose the following questions: (1) Whether you would be permitted to submit your resume for the position of Executive Director of PTP; (2) Whether you would be permitted to participate in the “Request for Proposal” (“RFP”) process and bid for the branding, marketing, and development contract(s) for PTP if you would return to your private consulting business; and (3) If you would be permitted to assume the role of consultant to or Executive Director of PTP, whether it would be considered a conflict of interest or a violation of the Ethics Act to work with or solicit business from statewide Tourism Partner Agencies or businesses affiliated with the tourism industry, where any compensation for your services would not be provided by DCED or derived from funds designated by DCED. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material McGraw, 14-542 August 28, 2014 Page 3 facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To the extent that your inquiry relates to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent your inquiry relates to future conduct, your inquiry may and shall be addressed. Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is prohibited from engaging in conduct that constitutes a conflict of interest: § 1103. Restricted activities (a)Conflict of interest.-- No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office/employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. McGraw, 14-542 August 28, 2014 Page 4 Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer or give to a public official/public employee anything of monetary value and no public official/public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official/public employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the questions presented. As the Executive Director of the Office of Travel, Tourism and Film within DCED, you would be considered a public official/public employee and an “executive-level State employee” subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Consequently, upon termination of Commonwealth employment, you would become a former public official/public employee and a former executive-level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act. Section 1103(i) restricts former executive-level State employees as follows: § 1103. Restricted activities (i)Former executive-level employee.-- No former executive-level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 1103(i). Section 1103(i) restricts the ability of a former executive-level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 1103(i) apply even where the business relationship is indirect, such as where the business in question is a client of a new employer, rather than the new employer itself. See, Confidential Opinion, 94-011. However, Section 1103(i) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a business subject to the conditions that you did not actively participate in recruiting such business to Pennsylvania, and that you did not actively participate in inducing such business to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. Unlike Section 1103(i), Section 1103(g) does not prohibit a former public official/public employee from accepting a position of employment. However, it does restrict the former public official/public employee with regard to “representing” a “person” before “the governmental body with which he has been associated”: McGraw, 14-542 August 28, 2014 Page 5 § 1103. Restricted activities (g)Former official or employee.-- No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). The terms “represent,” “person,” and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: § 1102. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. 65 Pa.C.S. § 1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public official/public employee himself, Confidential Opinion, 93-005, as well as a new governmental employer. Ledebur, Opinion 95-007. The term "represent" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official/public employee; (4) participating in any matters before the former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89-005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official/public employee on invoices submitted by his new employer to the former governmental body, even if the invoices pertain to a contract that existed prior to termination of service with such governmental body. Shay, Opinion 91-012. However, if such a pre-existing contract does not involve the unit where a former public employee McGraw, 14-542 August 28, 2014 Page 6 worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95-011. A former public official/public employee may assist in the preparation of any documents presented to his former governmental body. However, the former public official/public employee may not be identified on documents submitted to the former governmental body. The former public official/public employee may also counsel any person regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for, the new employer. Section 1103(g) only restricts the former public official/public employee with regard to representation before his former governmental body. The former public official/public employee is not restricted as to representation before other agencies or entities. However, the “governmental body with which a public official/public employee is or has been associated” is not limited to the particular subdivision of the agency or other governmental body where the public official/public employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion 90-006; Sharp, Opinion 90-009-R. The governmental body with which you would be deemed to have been associated upon termination of Commonwealth employment would be DCED in its entirety, including but not limited to the Office of Travel, Tourism and Film. Therefore, for the first year following termination of your Commonwealth employment, Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” before DCED. Having established the above general principles, you are advised as follows. As to your proposed employment as the Executive Director of PTP, you are advised that although Section 1103(g) of the Ethics Act would not prohibit you from accepting employment as the Executive Director of PTP, Section 1103(g) would prohibit you from performing any job duty(ies) that would involve prohibited representation before DCED as set forth above. While Section 1103(g) of the Ethics Act would be applicable, it would appear to be difficult if not impossible, as a practical matter, for you to perform the duties of the position of Executive Director of PTP without running afoul of Section 1103(g), due to DCED’s involvement with PTP. With regard to your proposed return to your private consulting business, you are advised that during the first year following termination of your employment with DCED, Section 1103(g) of the Ethics Act would restrict your conduct in your private consulting business to the extent such conduct would constitute prohibited representation before DCED. Section 1103(g) of the Ethics Act would prohibit you from participating in the “Request for Proposal” (“RFP”) process and bidding for the branding, marketing, and development contract(s) for PTP if such activity(ies) would involve prohibited representation before DCED as set forth above. With regard to Section 1103(a) of the Ethics Act, an advisory cannot provide a ruling as to past conduct. You are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your prospectively entering into a business/employment relationship with PTP subject to the conditions that you: (1) did not use the authority of your public position in matter(s) pertaining to PTP when you had an actual or reasonable expectation that you would McGraw, 14-542 August 28, 2014 Page 7 enter into a business/employment arrangement with PTP or would otherwise receive a private pecuniary benefit relating to PTP; and (2) did not otherwise use the authority of your public position or confidential information received as a result of being in your public position in furtherance of securing a business/employment arrangement with PTP or other private pecuniary benefit relating to PTP. Cf., Desmond, Opinion 08-004. You are further advised that following termination of your Commonwealth employment, the Ethics Act would not prohibit you from working with or soliciting business from statewide Tourism Partner Agencies or businesses affiliated with the tourism industry--where any compensation for your services would not be provided by DCED or derived from funds designated by DCED--subject to the condition that such activity(ies) would be performed within the parameters of Sections 1103(a), 1103(b), 1103(c), 1103(g), and 1103(i) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Governor’s Code of Conduct. Conclusion: As the Executive Director of the Office of Travel, Tourism and Film within the Pennsylvania Department of Community and Economic Development (“DCED”), you would be considered a public official/public employee and an “executive- level State employee” subject to the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, 51 Pa. Code § 11.1 et seq. Upon termination of Commonwealth employment, you would become a former public official/public employee and a former executive-level State employee subject to the restrictions of Section 1103(g) and Section 1103(i) of the Ethics Act, 65 Pa.C.S. §§ 1103(g), 1103(i). Under Section 1103(i) of the Ethics Act, you would not be prohibited from being employed by, receiving compensation from, assisting, or acting in a representative capacity for a business subject to the conditions that you did not actively participate in recruiting such business to Pennsylvania, and that you did not actively participate in inducing such business to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania. The governmental body with which you would be deemed to have been associated upon termination of your Commonwealth employment would be DCED in its entirety, including but not limited to the Office of Travel, Tourism and Film. For the first year following termination of your Commonwealth employment, Section 1103(g) of the Ethics Act would apply and restrict “representation” of a “person” before DCED. The restrictions as to representation outlined above must be followed. Based upon the submitted and administratively noted facts that: (1) before you commenced Commonwealth employment, you submitted a proposal to serve in the capacity of a consultant to help launch the Pennsylvania Tourism Partnership (“PTP”), a public/private partnership formed for the purpose of raising funds and directing the marketing strategy for the Pennsylvania tourism industry; (2) although you were one of two finalists for the consultant position, you were instead hired by DCED on June 3, 2013, for the position of Director of Tourism; (3) at the time of your hiring, it was indicated to you that once PTP was up and running, you would have the opportunity to assume the position of Executive Director of PTP should you decide to pursue such position; (4) you were promoted to your current position as the Executive Director of the Office of Travel, Tourism and Film on September 6, 2013; (5) PTP is a collaborative effort among public sector entities, including DCED and the Office of Travel, Tourism and Film, and private sector entities, including a non-profit corporation named “Team Pennsylvania Foundation” (“Team PA”); (6) the PTP Steering Committee is comprised of business and industry leaders and representatives from key government agencies and industry-related organizations from across the Commonwealth; (7) PTP will exist McGraw, 14-542 August 28, 2014 Page 8 initially within Team PA for up to three years during the start-up phase, operating under Team PA’s 501(c)(3) charter and funded with seed money from DCED for operating expenses; (8) PTP was launched in May 2014; (9) over the past year, DCED contributed $152,000 to Team PA to pay the PTP Project Director and cover miscellaneous operating expenses; (10) DCED is now providing a “D2 grant” of $750,000 to cover additional non-operating expenses and tourism grants; (11) the PTP Steering Committee is charged with overseeing the development of a strategic plan, branding, marketing campaign, and development plan; (12) the Secretary of DCED has a seat on the PTP Steering Committee, with a DCED Deputy Secretary as the designated alternate; (13) PTP is about to embark on a search to engage an additional consultant(s) or agency to help carry out goals related to development, branding, and marketing, and contract(s) will be awarded in September 2014; (15) although DCED provided funding to Team PA for such contract(s), the funding did not come from grants awarded by the Tourism Office but rather from a “D2 grant” administered and awarded by another branch of DCED; (16) you are considering seeking employment as the Executive Director of PTP; (17) funding for the Executive Director position would come from private sector dollars raised by the PTP Steering Committee, the PTP Project Director, and a development person; and (18) you are also considering returning to your private consulting business, which has been inactive since you commenced Commonwealth employment, you are advised as follows. Although Section 1103(g) of the Ethics Act would not prohibit you from accepting employment as the Executive Director of PTP, Section 1103(g) would prohibit you from performing any job duty(ies) that would involve prohibited representation before DCED as set forth above. While Section 1103(g) of the Ethics Act would be applicable, it would appear to be difficult if not impossible, as a practical matter, for you to perform the duties of the position of Executive Director of PTP without running afoul of Section 1103(g), due to DCED’s involvement with PTP. During the first year following termination of your employment with DCED, Section 1103(g) of the Ethics Act would restrict your conduct in your private consulting business to the extent such conduct would constitute prohibited representation before DCED. Section 1103(g) of the Ethics Act would prohibit you from participating in the “Request for Proposal” (“RFP”) process and bidding for the branding, marketing, and development contract(s) for PTP if such activity(ies) would involve prohibited representation before DCED as set forth above. With regard to Section 1103(a) of the Ethics Act, an advisory cannot provide a ruling as to past conduct. You are generally advised that the elements of a violation of Section 1103(a) of the Ethics Act would not be established as a result of your prospectively entering into a business/employment relationship with PTP subject to the conditions that you: (1) did not use the authority of your public position in matter(s) pertaining to PTP when you had an actual or reasonable expectation that you would enter into a business/employment arrangement with PTP or would otherwise receive a private pecuniary benefit relating to PTP; and (2) did not otherwise use the authority of your public position or confidential information received as a result of being in your public position in furtherance of securing a business/employment arrangement with PTP or other private pecuniary benefit relating to PTP. Following termination of your Commonwealth employment, the Ethics Act would not prohibit you from working with or soliciting business from statewide Tourism Partner Agencies or businesses affiliated with the tourism industry--where any compensation for your services would not be provided by DCED or derived from funds designated by DCED--subject to the condition that such activity(ies) would be performed within the parameters of Sections 1103(a), 1103(b), 1103(c), 1103(g), and 1103(i) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. McGraw, 14-542 August 28, 2014 Page 9 This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717-787-0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel